Instead UK Data Centres will be allowed to reach a separate Climate Change Agreement (CCA) in line with other energy-intensive industries such as manufacturing. The CCA scheme has been in place since 2001 and allows taxes to be reduced in certain sectors in exchange for a commitment to meet energy efficiency targets. This enables those sectors to remain competitive in a global market.
Under the CCA, the sector agrees efficiency targets, at levels where the cost won’t make the businesses uncompetitive. There are around 50 CCAs in operation, but the Data Centre industry’s is the first CCA in a sector which does not manufacture physical objects and is the first time such an agreement has been applied to the technology sector.
Under the previous regime, datacentres would have been required to pay a levy based purely on the amount of energy they consumed, rather than on how efficient they were. So, for example, a highly efficient, virtualised colocation facility would have had to pay the same as a inefficient old-style datacentre running ten times fewer servers but consuming the same amount of energy.
The industry argued this would make UK-based datacentres uncompetitive against overseas facilities that were not subject to blanket taxes, resulting in more offshoring by UK companies and less inward investment. This they feared would have seen the UK become an increasingly unattractive location to operate datacentres. The UK would have lost investment, expertise and capability to other countries, at significant economic cost.
The new agreement will only apply to the datacentre industry, not to large users operating their own datacentres, which is likely to boost the trend towards datacentre outsourcing and cloud computing.
Chris Smith, on365 Sales & Marketing Director commented, "This is good news for the Data Centre sector as it will encourage and reward energy efficiency without restricting growth or investment."